ITA NO.4678/Del/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC-2", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A. No. 4678/DEL/2014
A.Y. : 2007-08
KAMAL DHAWAN, INCOME TAX OFFICER,
C/O KAPIL GOEL, ADV., VS. WARD 27(2),
A-1/25, SECTOR-15, NEW DELHI
ROHINI,
DELHI ­ 110 085
(PAN: AAKPD2880K)
(APPELLANT) (RESPONDENT)
Assessee by : Shri Kapil Goel, Advocate
Department by : Sh. Sudhiranjan Senapati, Sr. DR
Date of Hearing : 06-08-2015
Date of Order : 28-09-2015
ORDER
PER H.S. SIDHU : JM
This is an appeal filed by the Assessee is directed against the
Order of the Ld. CIT(A)-XXIV, New Delhi dated 28.9.2012 for the
asstt. year 2007-08.
2. The following grounds have been raised in the Appeal.
Validity of Reopening u/s. 148
"1. That on the facts and in the circumstances of
the case and in law, Ld. CIT(A) erred in not
quashing the reopening action of the AO
being made in contravention of jurisdictional
conditions stipulated u/s. 147 to section 151 of
the Act.
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2. That on the facts and in the circumstances of
the case and in law, form RTI reply dated
17.6.2014, it is admitted by AO that reasons
were not communicated to appellant before
conclusion of assessment proceedings which
goes to the root of the matter and vitiates the
entire proceedings.
3. That on the facts and in the circumstances of
the case and in law, from reasons stated in RTI
reply dated 17.6.2014, it is manifest that
same do not amount to reasonable belief and
there is total lack of application of mind and
tangible material.
4. That on the facts and in the circumstances of
the case and in law, appellant has not been
provided the opportunity to rebut and confute
the reopening and reasons recorded as per
dictum of Apex Court in GKN Drive Shaft 259
ITR Page 19 thus nullifying entire proceedings.
Merits of the case
5. That on the facts and in the circumstances of
the case and in law, ld. CIT(A) erred in not
deleting the addition of Rs. 749,000/- made
on basis of conjectures and surmises and
suspicion and hearsay, whereas evidence on
records adequately proves appellant's case.
Violation of Principles of Natural Justice
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6. That on the facts and in the circumstances of
the case and in law, Ld. CIT(A) erred in not
deleting the addition of Rs. 749,000/- made in
violation of principles of natural justice as no
adequate opportunity is provided to assessee
to explain his case.
That the appellant craves leave to add, to
amend, modify, rescind, supplement or alter
any of the grounds stated herein above,
either before or at the time of hearing of this
appeal."
3. The brief facts of the case are that in this case, a TEP was
received from DG (Vigilance), New Delhi through CIT, Delhi-IX, New
Delhi vide letter No. CIT-IX/Hqrs/TEP/2007-08/1604 dated
12.09.2007 that a bank locker no. 33 of Shri Kamal Dhawan and
Smt. Anju Dhawan maintained with SBI, Subhash Nagar Branch, New
Delhi was operated on 08.06.2006 and a cash of Rs. 7.49 lakhs, 800
grams jewellery and 3 property papers were found in it. In fact, an
investigation was carried by the CBI, who carried out a search at the
Bank Locker of Sh. Kamal Dhawan, the assessee. The locker
contained cash amounting to Rs.7,49,000/-, approx. 800 grams of
gold jewellery and documents pertaining to three properties i.e.
shop no. 5 in Maya Enclave, Plot No. B-45, Sitapuri, Dabri and House
No. 7/143, Subhash Nagar. The assessee stated that these three
properties were purchased by him in the years 2000, 1999 and 1998
respectively. As regards the gold jewellery, he stated that most of it
was received by his wife Smt. Anju Dhawan at the time of their
marriage. The assessee gave a statement dated 14.06.2006,
recorded u/s. 161 of Cr.PC. by Sh. Rajiv Wahi, Inspector, CBI, SCR-II,
New Delhi. In the above statement, the assessee stated that he had
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kept cash of Rs.7,49,000/- in his bank locker no. 33 of SBl Branch
Subhash Nagar, which was collected by himself from the market and
his friend Sh. Sanjay Sharan, resident of Janakpuri, for purchasing
plywood core from Kashmir. He stated that the money was collected
and kept in the locker one week before the search at his residence
on 07.07.2005. The assessee further stated that his source of
income was from running a Dhaba in Maya Enclave. He further
stated that he earned approximately Rs. 3 to 4 lacs from the
passport work which he did for nine years. He stated that he was
filing his return of income showing business in the name of M/s.
Dhawan Enterprises, which did not exist. The locker was opened on
8.6.2006 in the presence of the assessee, his wife Smt. Anju
Dhawan, Sh. Rajiv Wahi, Inspector, CBI and Dy. Manager, Accounts
in SBI Subhash Nagar, New Delhi Sh. Ravi Chopra. This information
was passed on to the AO, who issued notice u/s. 148 for AY 2007-08
on 2.6.2009, since the assessment proceedings for that year had
already been completed by that time. Thereafter, notice u/s. 143(2)
dated 08.07.2009 was served on the assessee. In response, the
assessee filed a copy of return which had already been filed for A.Y.
2007-08 declaring a total income of Rs.1,24,916/-. With regards to
cash of Rs.7,49,000/-, the AO issued a query letter to the assessee,
who replied that out of this amount Rs.2,50,000/- belonged to Sh.
Sanjay Sharma, Rs.3,70,000/- belonged to Sh. Jatinder Pal Singh and
Rs. 1,29,000/- belonged to him and his wife. The assessee also
claimed that approx. 800 grams of jewellery found belonged to him
and his wife. The AO issued letters uls. 133(6) to Sh. Sanjay Sharma
and Sh. Jatinder Pal Singh, whose statements were recorded by the
AO on 13.12.2010. Both Sh. Sanjay Sharma and Sh. Jatinder Pal
Singh admitted that they had given cash of Rs.2,50,000/- and
Rs.3,70,000/- to the assessee for business purposes, but both of
them were not aware that this cash was kept in locker no. 33 with
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SBI, Subhash Nagar, New Delhi. The AO did not accept the
explanations given by the assessee with regards to the cash found
and added the amount of Rs.7,49,000/- to the income of the
assessee as undisclosed cash receipts and assessed the income at
Rs. 8,73,920/- vide order dated 24.12.2010 passed u/s. 147/143(3)
of the Income Tax Act, 1961.
4. Aggrieved with the aforesaid assessment order dated
24.12.2010, Assessee was in appeal before the Ld. CIT(A), who
vide impugned order dated 28.9.2012 has dismissed the appeal of
the assessee.
5. Against the aforesaid order of the Ld. CIT(A), Assessee is in
appeal before the Tribunal.
6. Ld. Counsel of the assessee reiterated the contention raised in
the grounds of appeal wherein he stated that the reopening action
of the AO and confirmed by the Ld. CIT(A) being made in
contravention of jurisdictional conditions stipulated u/s. 147 to
Section 151 of the Act. He further submitted that the from the Reply
dated 17.6.2014, it was admitted by the AO that reasons were not
communicated to assessee before conclusion of assessment
proceedings which goes to the root of the matter and vitiates the
entire proceedings and the reasons are not reasonable to believe
and there is a total lack of application of mind and tangible material.
In order to support this contention, the submitted that the assessee
has not been provided the opportunity to rebut and confute the
reopening and reasons recorded as per dictum of Apex Court in GKN
Drive Shaft 259 ITR Page 19 thus nullifying entire proceedings. He
further referred the various case laws of the Delhi High Court by
which the present case of the assessee is covered including the
case of Signature Hotel Pvt. Ltd. (2011) 338 ITR 51.
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7. On the other hand, Ld. DR relied upon the order passed by the
Ld. CIT(A) on the issue in dispute.
8. I have heard both the parties and perused the records. I find
that the AO has recorded the reasons for belief that income has
escaped assessment as under. The same is attached with the Paper
Book filed by the assessee.
"Reasons for the belief that income has escaped
assessment:
1. An information has been received from CBI, New Delhi
vide letter No. 3/6(a)2004 SCU/V/SCR.II/3015 dated
20.7.2007 that Shri Kamal Dhawan has kept the cash
of Rs. 749,000/- and jewellery of 800 grams in locker
No. 33, SBI, Subhash Nagar, New Delhi.
2. On the basis of above information and perusal of asstt.
records, it is found that assessee has not shown any
cash in hand nor in the books of accounts even he has
not shown any jewellery in the books of accounts.
3. On the basis of information as per para 1 above, I have
reason to believe that assesee has not disclosed true
and correct particulars of his income and income has
escaped assessment is likely to exceed more than Rs.
100,000. Notice u/s. 148 is required to be issued to
assessee for asstt. year 2007-08.
Sd/-
(S.P. Sachdeva)
ITO, Ward 27(2), New Delhi
9. I find that Assessee Sh. Kamal Dhawan has asked some
information from the Income Tax Department under the Right to
Information Act, 2005 and the Income Tax Department has replied
the said information by passing an Order dated 176.2014 issued
vide F.No. ITO/Ward27(2)/RTI/2014-15/32. For the sake of clarity,
the contents of the order is reproduced as under:-
"The application from Sh. Kamal Dhawan (the
applicant) has been received in this office on
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23.5.2014 with request to supply following
information.
In this regard, question wise reply in respect of
this office is as under:-
S.No. Information/ Details Reply / Status
required
1. Whether before issuing Yes
notice u/s. 148 for Asstt.
year 2007-08, any reasons
were recorded by Assessing
Officer kindly reply in Yes
or No.
2. If answer is Yes, whether You have not
same were informed to the made and any
Assessee and whether a request to
copy of said reasons were provide the
served on Assessee. same during
assessment
proceedings.
3. Also provide copy of the Copy attached.
said reasons recorded
alongwith accompanying
material.
In case you wish to file an appeal against this
order, you may file the same within thirty days from
the receipt of this letter before the appellate
Authority i.e. the Jt. CIT, Range-27, New Delhi at
Room No. 1806, 18th floor, Pratyaksh Kar Bhawan, E-
2 Block, Dr. SPM Civic Centre, Minto Road, New
Delhi ­ 110 002.
Sd/-
(Suresh Kumar)
Central Public Information
Officer & Income Tax Officer,
Ward 27(2), New Delhi
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9.1 From the above, I find considerable cogency in the assesse's
counsel submission that was not given opportunity to rebut and
confute the reopening and reasons recorded as per dictum of Apex
Court in GKN Driveshafts (India) Ltd. vs. ITO [2003] 259 ITR 19
which nullifying entire proceedings. In this case, the Hon'ble Apex
Court has held as under:-
"That after the receipt of the notice under section 148 of
the I.T. Act, the assesse must file the return, but he is
entitled to ask for the reasons for issuance of a notice.
The Supreme Court has further held that when the
reasons are asked for, the AO is bound to furnish the
reasons within a reasonable time. Thus the sine qua non
for issuance of a notice under section 148 of the I.T. Act
is recording of the reasons by the AO. In our view
recording of the reasons and furnishing copy thereof to
the Assessee when asked is not an empty formality. If
the reasons recorded and a copy thereof required to be
furnished to the assessee on demand the assessee would
be entitled to show that the reasons recorded were
factually incorrect. Furthermore, the power of the AO to
proceed with the Assessment proceedings would be
limited by the reasons recorded by him. He would be
assessing or reassessing the income of the assessee only
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on the reasons recorded by him and cannot travel
beyond the reasons and continue the proceedings of
assessment on different reasons."
9.2 In the background of the aforesaid discussions and precedent
relied upon, I am of the considered view that only effective ground
in this appeal is reassessment proceedings u/s. 148 of the I.T. Act,
the Assessee has reiterated that reassessment proceedings are
illegal and without jurisdiction in the absence of any tangible
evidence or material in respect of any undisclosed income and
recording of requisite satisfaction in respect of any such undisclosed
income. After hearing both the parties on the issue in dispute as well
as after going through the orders passed by the Revenue Authorities
alongwith order dated 21.7.2011 passed by the Hon'ble
Jurisdictional High Court in the case of Signature Hotels P. Ltd. vs.
Income Tax Officer [2011] 338 ITR 0051 wherein the Hon'ble High
Court has held matter as under:-
"Held, allowing the petition, that the reassessment
proceeding were initiated on the basis of
information received from the Director of Income
Tax (Investigation) that the petitioner had
introduced money amounting to Rs. 5 lacs during
the financial year 2002-03 as stated in the
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Annexure. According to the information, the
amount received from a company, S, was nothing
but an accommodation entry and the assesee was
the beneficiary. The reasons did not satisfy the
requirements of Section 147 of the Act. There was
no reference to any document or statement, except
the annexure. The annexure could not be regarded
as a material or evidence that prima facie showed
or established nexus or link which disclosed
escapement of income. The annexure was not a
pointer and did not indicate escapement of income.
Further, the Assessing Officer did not apply his own
mind to the information and examine the basis and
material of the information. There was no dispute
that the company, S, had a paid-up capital of Rs. 90
lakhs and was incorporated on January 4, 1989, and
was also allotted a permanent account number in
September, 2001. Thus, it could not be held to be a
fictitious person. The reassessment proceedings
were not valid and were liable to be quashed."
10. In view of above, I am of the considered view that the above
issue is exactly the similar to the issue involved in the present
appeal and is squarely covered by the aforesaid decisions of the
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Apex Court in GKN Driveshafts (India) Ltd. vs. ITO [2003] 259 ITR 19
and Hon'ble High Court of Delhi decision delivered in Hotel
Signatures Ltd. (Supra). Hence, respectfully following the above
precedents, I decide the legal issue in dispute in favour of the
Assessee and against the Revenue and accordingly quash the
reassessment proceedings. The other issues are not dealt with as
the same have become academic in nature.
11. In the result, the Assessee's Appeal stands allowed.
Order pronounced in the Open Court on 28/9/2015.
Sd/-
[H.S. SIDHU]
JUDICIAL MEMBER
Date 28/9/2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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